Medicaid: Why Alabama Needs to Expand

Photo Credit: https://pixabay.com/vectors/medical-hospital-icons-doctor-4510408/ (last visited Dec. 16, 2021).

Authored By: Mickala Lewis

Research and Writing Editor, American Journal of Trial Advocacy

          Medicaid is a public health insurance program for individuals with low income in the United States.[1]  Since April 2021, Medicaid has provided healthcare coverage for over 75 million Americans, 751,960 of which are Alabamians.[2]  The program was created in 1965 when President Lyndon B. Johnson signed Title XIX of the Social Security Act into law.[3] Originally, Medicaid did not provide coverage to all low income individuals.[4]  Rather, eligibility was limited to individuals with low income who also fell into one of the following categories: children, pregnant women, elderly, or disabled.[5]  Over time, Congress expanded the program to offer more benefits and provide coverage to more people.[6]  The most recent expansion was in 2010 under the Affordable Care Act (“ACA”).[7]  The ACA expanded eligibility to all individuals with incomes up to 138 percent of the federal poverty level (“FPL”).[8]   

            Medicaid is jointly administered by the federal and state governments.[9]  Each state operates its own Medicaid program within the broad parameters established by the federal government.[10]   The ACA provided that if a state refused to comply with the expansion, it could not only lose its funding for the expansion requirements, but all its Medicaid funding from the federal government.[11] Given the crucial role federal funding plays in states’ ability to administer the program, twenty-six states brought suit challenging the constitutionality of the provision.[12]  In National Federation of Independent Businesses v. Sebelius, the Supreme Court declared the mandatory expansion provision unconstitutional.[13] The Court found the provision exceeded Congress’s power under the Spending Clause because it was impermissibly coercive and left states with no meaningful choice.[14]  Therefore, states can choose whether they want to expand Medicaid eligibility or not.[15]  

            Medicaid is also funded by both the federal and state governments.[16]  The federal share for traditional Medicaid, known as the Federal Medical Assistance Percentage, is determined by a formula based on a state’s per capita income relative to other states.[17]  “The formula is designed so that the federal government pays a larger share of program costs in poorer states.”[18]  In 2021, the federal share of Traditional Medicaid in Alabama was 73%, and the state share was 27%.[19]  The federal government, however, provides an enhanced matching rate for Medicaid expansion under the ACA.[20]  From 2014 to 2016, the federal government provided states that chose to expand with 100% of the funding needed to cover the cost of newly eligible enrollees.[21]  Between 2016 and 2020, the federal share gradually decreased until it reached 90%, where it will remain.[22]  Thus, states are responsible for covering 10% of the costs of Medicaid expansion.[23]

            As of October 2021, twelve states, including Alabama, have not chosen not to expand.[24]  Alabama has the second strictest Medicaid eligibility requirements in the United States.[25]  The Alabama Medicaid program only covers children up to 146% of the federal poverty level (“FPL”); pregnant women up to 146% of the FPL; parents and caretaker relatives up to 18% of the FPL; and elderly and disabled individuals with certain medical conditions and income levels.[26]  Childless adults are not eligible.[27]

            The benefits of Medicaid expansion are well documented.  A review of over 400 research studies by the Kaiser Family Foundation found that Medicaid expansion is associated with greater access to care, improved affordability of care, increased coverage, and increased utilization of care for individuals.[28]   If Alabama were to expand Medicaid, it is estimated 314,000 uninsured nonelderly adults could gain healthcare coverage, and Alabama’s insured rate would drop by about 43%.[29]  Of the people who would gain coverage under expansion, more than 3 in 4 are adults living below poverty and 6 in 10 are families with at least one worker.[30]  Research also demonstrates that Medicaid expansion leads to increases in: “people getting regular check-ups; early-stage cancer diagnoses; prescriptions filled for heart disease and diabetes; and people getting surgical care consistent with clinical guidelines.”[31]  Further, expansion leads to decreases in: people skipping medications due to costs; people screening positive for depression; one-year mortality among patients diagnosed with end stage renal disease; and people without a primary care physical or usual source of care.[32]  A poll in 2021 found that most Alabama voters support expansion.[33] 

            Expansion can also be beneficial to hospitals. The Kaiser Family Foundation review also found that expansion decreased uncompensated care costs.[34]  This could be particularly beneficial to hospitals in Alabama given that more than twelve hospitals in the state have closed since expansion became an option, and 88% of healthcare facilities in Alabama operate at a loss.[35]  Unsurprisingly, both the Alabama Hospital Association and Medical Association of the State of Alabama support expansion.[36]  Further, in April 2021, 300 medical professionals in Alabama signed a letter in support of expansion.[37]

            Alabama has considered expanding Medicaid for years. In 2015, Robert Bentley, Alabama’s governor at the time, created the “Alabama Healthcare Improvement Task Force.”[38]  The task force unequivocally recommended Alabama expand its Medicaid program as quickly as possible.[39]  The chief concern was how to fund the expansion.[40]  The University of Alabama at Birmingham School of Public Health issued a report in 2015 that estimated expansion would cost Alabama an additional $222 million per year, starting in 2020, when the state became responsible for 10% of the cost.[41]  In 2016, without expanding eligibility, the Medicaid program in Alabama was already $85 million short in the state’s budget.[42]  Unlike the federal government, state governments cannot operate at a deficit and are required to regularly balance their budgets.[43]  However, if Alabama expanded, it could have received an estimated $12 billion in federal funding between 2014 and 2020.[44]  Ultimately, Alabama chose not to expand and temporarily funded its existing Medicaid program using funds from the BP oil spill settlement.[45] 

            In 2017, Kay Ivey became governor after Bentley resigned due to a scandal.[46]  Ivey did the opposite of prioritizing program expansion by directing the Medicaid Commissioner to draft a Section 1115 demonstration waiver conditioning Medicaid eligibility on satisfaction of work requirements.[47]  To receive funding for Medicaid from the federal government, states have to abide by certain minimum guidelines established by the federal government.[48]  However, states can request a waiver of a requirement from the Secretary of the Department of Health and Human Services to engage in “experimental,  pilot,  or  demonstration  project[s]” that assist in promoting the objectives of Medicaid.[49]  Many states sought approval for Section 1115 work waivers, but Alabama is unique in that it submitted a request with some of the strictest requirements without expanding Medicaid.[50]  The work requirement primarily applied to the parent or caregiver category of Medicaid recipients; most other recipients would have been exempt.[51]  Yet, all recipients had to comply with complicated reporting procedures to document their exemption or their satisfaction of the work requirements.[52]  However, if a recipient satisfied the work requirement, they would make too much money to qualify for Medicaid, but recipients who did not comply would lose their benefits for not complying with the work requirements.[53]  Given that Medicaid recipients are more likely to work at minimum wage jobs, it is unlikely they would be able to obtain coverage through their employer.[54]  Thus, the work requirement was likely to leave these individuals with no feasible mechanism for receiving healthcare coverage. Alabama withdrew its waiver request in February 2021, amid the pandemic.[55]

            The American Rescue Plan Act revived discussions about Alabama expanding Medicaid. The Act was signed by President Joe Biden earlier this year to provide additional incentives for the remaining twelve states to expand.[56]  The Act offers states a five percentage point increase in their regular federal matching rate for two years after they expand, in addition to the 90% federal matching funds available under the ACA for the expansion population.[57]  The incentive does not expire and is available whenever a state newly expands Medicaid.[58]  This new incentive could provide economic benefits to Alabama.[59]  One study estimated expansion could create 14,200 health care jobs, 2,100 construction jobs, 3,200 retail jobs and about 9,000 jobs in other sectors.[60]  Kentucky has a slightly smaller population than Alabama, and the Equal Justice Center in Kentucky found after expanding Medicaid, the state gained 14,000 jobs.[61]  Given the numerous benefits to individuals, hospitals, and its economy, Alabama should take advantage of the opportunity and finally expand Medicaid.


[1]Robin Rudowitz et al., 10 Things to Know about Medicaid: Setting the Facts Straight, Kaiser Family Foundation (Mar. 6, 2019), https://www.kff.org/medicaid/issue-brief/10-things-to-know-about-medicaid-setting-the-facts-straight/.

[2]April 2021 Medicaid & CHIP Enrollment Data Highlights, U.S. Centers for Medicare & Medicaid Services, https://www.medicaid.gov/medicaid/program-information/medicaid-and-chip-enrollment-data/report-highlights/index.html (last visited Oct. 15, 2021); State Medicaid and CHIP Applications, Eligibility Determinations, and Enrollment DataU.S. Centers for Medicare & Medicaid Services, https://data.medicaid.gov/dataset/6165f45b-ca93-5bb5-9d06-db29c692a360 (last updated Sept. 15, 2021).

[3]History, U.S. Centers for Medicare & Medicaid Services, https://www.cms.gov/About-CMS/Agency-Information/History (last updated Jan. 13, 2020, 02:44 P.M.).

[4] Medicaid Program Description and Legislative History, Social Security Office of Retirement and Disability Policy, https://www.ssa.gov/policy/docs/statcomps/supplement/2015/medicaid.html (last visited Oct. 15, 2021).

[5]Id.

[6]Rudowitz, supra note 1.

[7]History, supra note 3.

[8]Medicaid Expansion, IHC Specialty Benefits, Inc., https://www.healthinsurance.org/glossary/medicaid-expansion/ (last visited Oct. 15, 2021); Coverage Year 2021, Center on Budget and Policy Priorities, http://www.healthreformbeyondthebasics.org/wp-content/uploads/2020/08/REFERENCE-GUIDE_Yearly-Guideline-and Thresholds_CoverageYear2021-2.pdf (last visited Oct. 15, 2021) (finding that 138% of the FPL for a household of 1 was $17,608 in the 2020 Fiscal Year).

[9]Rudowitz, supra note 1.

[10]Medicaid Program Description and Legislative History, supra note 4.

[11]Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 542 (2012).

[12]Id.

[13]Id. at 588.

[14]Id. at 581-82.

[15]Id. at 587.

[16]Rudowitz, supra note 1.

[17]Financial Management, U.S. Centers for Medicare & Medicaid Services, https://www.medicaid.gov/medicaid/financial-management/index.html (last visited Oct. 15, 2021); Laura Snyder & Robin Rudowitz, Medicaid Financing: How Does it Work and What are the Implications?, Kaiser Family Foundation (May 20, 2015), https://www.kff.org/medicaid/issue-brief/medicaid-financing-how-does-it-work-and-what-are-the-implications/.

[18]Synder & Rudowitz, supra note 17.

[19]Who Could Medicaid Reach With Expansion in Alabama? Uninsured Adults Who Would Become Eligible for Medicaid Under Expansion, Kaiser Family Foundation, https://files.kff.org/attachment/fact-sheet-medicaid-expansion-AL (last visited Oct. 15, 2021).

[20]Synder & Rudowitz, supra note 17.

[21]Id.

[22]Id.

[23]Id.

[24]Status of State Action on the Medicaid Expansion Decision, Kaiser Family Foundation, https://www.kff.org/health-reform/state-indicator/state-activity-around-expanding-medicaid-under-the-affordable-care-act/?currentTimeframe=0&sortModel=%7B%22colId%22:%22Location%22,%22sort%22:%22asc%22%7D (last visited Oct. 15, 2021).

[25]Amy Yurkanin, Medicaid Expansion Could Create 28,500 Jobs In Alabama, Advocates Say, Al.com (Jun. 02, 2021, 5:36 P.M.), https://www.al.com/news/2021/06/medicaid-expansion-could-create-28500-jobs-in-alabama-advocates-say.html.

[26]Louise Norris, Alabama and the ACA’s Medicaid Expansion, IHC Specialty Benefits, Inc. (Aug. 4, 2021), https://www.healthinsurance.org/medicaid/alabama/; Medicaid Income Limits for 2021, Alabama Medicaid (revised Jan. 2021), https://medicaid.alabama.gov/documents/3.0_Apply/3.2_Qualifying_Medicaid/3.2_Medicaid_Income_Limits_2021.pdf (stating that as of February 2021, to be eligible for Medicaid in Alabama, based on the 146% FPL, a pregnant woman’s income after deductions could not exceed $1,586 per month for a family of 1 or $3,225 for a family of 4) (stating that based on the 18% FPL, a parent or caretaker’s income after deductions could not exceed $194 for a family of one or $398 for a family for four).

[27]Id.

[28]Who Could Medicaid Reach with Expansion in Alabama? Uninsured Adults Who Would Become Eligible for Medicaid Under Expansion, supra note 19.

[29]Id.

[30]Id.

[31]The Far-Reaching Benefits of the Affordable Care Act’s Medicaid Expansion, Center on Budget and Policy Priorities, https://www.cbpp.org/research/health/chart-book-the-far-reaching-benefits-of-the-affordable-care-acts-medicaid-expansion#3 (last updated Oct. 21, 2020).

[32] Id.

[33]Amy Yurkanin, Most Alabamians, Including Half of GOP, Support Medicaid Expansion, New Poll Finds, Al.com (Feb. 17, 2021, 8:01 A.M.), https://www.al.com/news/2021/02/most-alabamians-including-half-of-gop-support-medicaid-expansion-new-poll-finds.html.

[34]Who Could Medicaid Reach with Expansion in Alabama? Uninsured Adults Who Would Become Eligible for Medicaid Under Expansion, supra note 19.

[35]D. Wylie Butler, Alabama is Leaving Money on the Table with Medicaid Expansion, Alabama Political Reporter (Nov. 2, 2020), https://www.alreporter.com/2020/11/02/opinion-alabama-is-leaving-money-on-the-table-with-medicaid-expansion/.

[36]Yurkanin, supra note 25.

[37]Id.

[38]Norris, supra note 26.

[39]Id.

[40]Id.

[41]Id.

[42]Id.

[43]Synder & Rudowitz, supra note 17.

[44]Norris, supra note 26.

[45]Id.

[46]Id.

[47]Id.

[48]Gresham v. Azar, 950 F.3d 93, 96 (D.C. Cir. 2020).

[49]42 U.S.C. § 1315(a); Id.

[50] Medicaid Waiver Tracker: Approved and Pending Section 1115 Waivers by State, Kaiser Family Foundation (Oct. 08, 2020), https://www.kff.org/medicaid/issue-brief/medicaid-waiver-tracker-approved-and-pending-section-1115-waivers-by-state/#Table2.

[51]Norris, supra note 26.

[52]Rachel Garfield et al., Implications of Work Requirements in Medicaid: What Does the Data Say?, Kaiser Family Foundation (Jun. 2020), https://files.kff.org/attachment/Issue-Brief-Implications-of-Work-Requirements-in-Medicaid-What-Does-the-Data-Say.

[53]Norris, supra note 26.

[54]Garfield, supra note 51.

[55]Alabama Medicaid Workforce Initiative, U.S. Centers for Medicare & Medicaid Services, https://www.medicaid.gov/medicaid/section-1115-demo/demonstration-and-waiver-list/80931 (last visited Oct. 15, 2021).

[56]MaryBeth Musumeci, Medicaid Provisions in the American Rescue Plan Act, Kaiser Family Foundation (Mar. 18, 2021), https://www.kff.org/medicaid/issue-brief/medicaid-provisions-in-the-american-rescue-plan-act/.

[57]Id.

[58]Id.

[59]Yurkanin, supra note 33.

[60]Yurkanin, supra note 25.

[61]Id.

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